ACC Urges White House, Congress to Prevent Crippling Rail Strike

The American Chemistry Council (ACC) is calling on the White House and Congress to act quickly to keep vital chemical shipments running as a freight rail strike threatens to shut down the US economy.

“Chemical manufacturers are one of the first industries to be affected as railroads begin limiting service up to a week before a threatened strike,” said Chris Jahn, ACC president and CEO. “Freight rail transportation is essential for transporting chemicals critical to everyday life, including water treatment, energy generation, and food production. Stopping chemical shipments by rail would send an immediate shockwave that would be felt throughout the economy and through families across the country.”

To prepare for a shutdown, railroads stopped accepting “safety sensitive shipments” — including some chemicals — in advance of a strike. Many chemical facilities will be forced to reduce production or close rail service within the first week of the ban.

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If there was a real strike and the rail network was completely shut down, the ACC felt it would chill the entire economy and plunge the country into recession.

According to an economic analysis conducted by the ACC, the impact of a potential strike would be felt almost immediately in terms of business closures, shortages of materials and products, and loss of economic activity. According to the analysis, a month-long strike is likely to put a big chill on several key economic indicators in the first half of 2023:

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• Job losses: The U.S. economy will lose 700,000 jobs across multiple industries and economic sectors, erasing job gains made over the past three months.
• Inflation spike: Producer Price Index (PPI) will increase by 4%. PPI measures inflation from an industry perspective and is considered a leading indicator for consumer inflation. A 4% spike would represent a twenty-fold increase over the latest PPI reading.
• Economic recession: Gross domestic product (GDP) would contract by one percentage point, draining about $160 billion from the economy. To put that in perspective, during the financial meltdown in 2008, the economy lost $210 billion in the first half of 2008.

“A rail strike could push the economy out of recovery mode and into recession,” said Martha Moore, ACC chief economist. “A prolonged strike will have an exponential effect for each additional month and drag the country even faster into a potential recession.”

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Action is a must

To avoid a massive shock to a fragile US economy, Congress must act before a strike occurs. That’s why the ACC recently joined hundreds of other business groups this week in calling on Congress to block the strike.

“This is a preventable crisis that should not fall on the shoulders of American consumers and manufacturers,” Jahn said. “President Biden and Congress must work this week on a bipartisan solution based on the terms labor leaders and the railroads agreed to in September.”

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